Quick Service Restaurant Feasibility Study in Alabama

Alabama counter-service loans run large

Alabama's quick-service restaurants borrow more than the class does across the country, and Alabama's median is the reading that passes our test against the Alabama all-asset book and limited-service restaurants nationally alike. The Alabama median was $424,800, or 1.37x what quick-service borrowers take nationally, and Alabama's interquartile range ran from $234,000 to $715,500. Over FY2017 to FY2026, Alabama approved 217 such loans worth $131.2 million. The likely driver is the brand share: 60.4% of Alabama quick-service loans went to franchise units, and franchised drive-through restaurants usually come with set building, equipment and site standards that lift the ticket.

Within Alabama, quick service ranks 2 of 39 by loan count, and with a 1.41x location quotient it holds a noticeably larger share of Alabama SBA lending than of the national book. Alabama ranks 27 of 54 among states for the class. Lending stepped up late in the period, from 12 approvals in FY2022 to 33 worth $24.0 million in FY2024 and 32 in FY2025.

Who lends to Alabama restaurant operators

The 7(a) holders are led by United Community Bank with 14 Alabama loans worth $10.5 million, then Live Oak Banking Company with 11 worth $10.7 million, Sabre Finance with 11 worth only $1.9 million, The Huntington National Bank with 9 and BankFirst Financial Services with 8. Alabama's 504 business, 29 loans against 188 under 7(a), is led by Southern Development Council with 14, followed by Birmingham Citywide Local Development Company with 7 and Florida Business Development Corporation with 5.

Credit is the Alabama gauge to respect. Among 85 Alabama loans funded from FY2017 to FY2021, 7.1% are charged off to date, yet only 2.4% failed in the first five years, so most Alabama losses have come after the restaurant was established, when lease renewals, remodel demands or new competition arrive. Alabama's FY2017 to FY2024 approvals were cancelled at a floor rate of 11.5%, with 12.1% as the ceiling. All of these are floors.

What an Alabama quick-service study must test

Jefferson County holds 50 approvals, Madison 24, Baldwin 18, Mobile 14, and Lee, Shelby and Tuscaloosa 12 each, so an Alabama site can usually be compared with local deals. A feasibility study must test traffic counts, access and visibility, the competing quick-service units nearby, and the brand's sales record in comparable Alabama markets. Cost must reflect the franchisor's prototype and current site-work pricing. Because Alabama losses have come late, the coverage ratio should be tested over the life of the loan, including the brand's remodel cycle and royalty, not only in year one. If the Alabama loan buys land or a building, the appraisal has to support it as retail real estate without the franchise.